Caixin service PMI rises to 17-month high

A waitress serves fish at a restaurant in Suzhou, Jiangsu province. [Photo provided to China Daily]

BEIJING - China's service sector continued to expand in December 2016, posting its strongest rate in 17 months, according to a private survey Thursday.

The Caixin General Services Purchasing Managers' Index (PMI) edged up to 53.4 from 53.1 in November 2016, according to the survey conducted by financial information service provider Markit, sponsored by Caixin Media.

The previous high was 53.8 in July 2015. A reading above 50 indicates expansion, while below 50 represents contraction.

Demand in the sector picked up as new orders at service companies rose in December at the fastest pace in 17 months.

Rising raw-material costs for service companies caused expenses to soar at their quickest rate in nearly two years, but service providers only slightly raised their prices in December due to market competition.

Optimism about growth prospects in 2017 reached a four-month high, with surveyed companies generally showing more confidence due to improving market conditions and company expansion.

The Caixin China Manufacturing PMI, released Tuesday, hit a 47-month high of 51.9 in December.

The strong performance in the two sectors meant the Caixin Composite Output Index, which reflects performance in both sectors, hit a 45-month high of 53.5 in December from November's 52.9.

Zhong Zhengsheng, director of macroeconomic analysis at CEBM Group, an investment research firm, said the figures showed continued recovery in China's economy.

"The Chinese economy performed better in the fourth quarter than in the previous three quarters. It is without question that the government full year growth target will be reached," Zhong said.

China's GDP grew 6.7 percent in the first three quarters of 2016, within the government target of between 6.5 and 7 percent for the year.

National Bureau of Statistics data showed that China's manufacturing and non-manufacturing PMI posted the second highest monthly reading of 2016 in December, adding to signs of economic stabilization.